welcome to the collaboratory · 2019-09-04 · private insurers usually pay $1.34 per dollar of...

© 2018 Abbott Laboratories.

THE VALUE-CREATING COLLABORATION MODEL:

AN INTEGRATED APPROACH TO CO-CREATING VALUE

WHEN BARRIERS ARE REMOVED, THE WHOLE SYSTEM WORKS BETTER TOGETHER

WELCOME TO THECOLLABORATORY

E XE C U T I V E S U M M A RY

In today’s healthcare world, increasing pressures to reduce costs and increase revenue while maintaining or improving quality are pushing healthcare systems to their limits. The current models for providing healthcare and paradigms for operating provider institutions are not sustainable —changes are required to create new value and ensure these increasing demands can be met.

One of the biggest opportunities for creating new value while meeting the challenges resides in the evolution of interactions, teamwork, and even integration between Suppliers and customers —from outdated business relationships to Value-Creating Collaborations.

T H E R E L E VA N C E O F T H E L A B

Traditionally, the Lab has been viewed as a cost center, but it should be viewed as a revenue generating decision support engine. The Lab’s value is realized by helping physicians make better decisions to eliminate waste and provide improved patient care. Institutions that realize the Relevance of the Lab establish themselves as leaders in their healthcare system through increased investment and commitment to creating value with improved outcomes and decreased costs.

The Value-Creating Collaboration Model

VA LU E- C R E AT I N G CO L L A B O R AT I O N

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Change is Creating OpportunityThe US healthcare industry is a $3.5 trillion dollar market representing 17.9% of the gross domestic product. (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html). As a business model alone, it’s incredibly complex with revenue controlled by third-party entities (payors), benefit being derived from consumers who often do not know the full costs, and incredibly highly trained employees working in regionally different markets.

Additionally, medicine itself is ever-evolving with recent transitions in the last decade from activity-paid decisions and treatment to quality-based decisions looking at access, outcomes, satisfaction with care, care pathways and the financial measures of doing care. These changes are driven by consumerism, government payment changes affecting nearly 60%1 of a systems’ patient base, and an increase in care settings networked through digital platforms.

Combining these issues and the changing patient population, modern healthcare has significant new drivers: 1. Budget constraints 2. Productivity challenges – an influx of older patients which is paid

less under CMS• For every $1 a hospital actually spends on care, Medicare

generally reimburses 90 to 95 cents, according to the AHA. Private insurers usually pay $1.34 per dollar of expenses.2

3. Shifting patient/consumer demands (7 billion mobile devices and counting)• 86% of clinicians believe mobile apps will be central to care

by 2020.3

4. Patient satisfaction being publicly measured, paid on, and reported

RELEVANCE TAKES TWO COMPONENTS:• Someone has to want,

need, or be interested in “something”

• Someone else has to be in a position to provide that “something”

Non-Lab Stakeholders (i.e. the CEO, MoH, Payors, etc.) need all departments in their system to be “relevant.” If all departments are relevant, that means all departments are creating meaningful value.

1 Payment & Delivery Reform: Implications for Laboratory Services, Avalere Health, January, 2016

2 Luhby, T. (2013, May 22). Medicare payment rates: $15,000 for one hospital, $26,000 for another. Retrieved from http://money.cnn.com/2013/05/22/news/economy/medicare-payments-hospitals/index.html

3 Mottl, J. (2016, December 20). Mobile healthcare innovation makes big headlines in 2016. Retrieved from https://www.fiercehealthcare.com/mobile/mobile-healthcare-technology-2016-year-review


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Lab Stakeholders need to be relevant, but producing results at a low cost does NOT make them so. Only creating NEW value for the patient and non-Lab stakeholders will make a Lab relevant.

THE HEALTHCARE ECOSYSTEM IS UNSUSTAINABLEEverything in healthcare is on the rise. Consumerism, chronic disease and the aging population is continuing to grow, thus creating the demand for increased performance by healthcare institutions. Today, Healthcare Ecosystems are challenged to do more with less. Those that can create real value for patients and meet the increase in demand while reducing costs will be the ones to survive.

These challenges, however, create opportunity. Healthcare providers and payors who adapt their operating models to increase the quality of their service while simultaneously addressing revenue changes and decreasing the overall cost to provide it, will not only succeed, they will thrive. This process of Cost + Quality improvement is known as Value-Creating Innovation.

KEY DATA: 1) C-Suite has higher

expectations for the lab (52% believe labs impact patient satisfaction, 100% believe that labs should advise doctors on test ordering)

2) HCPs want better collaboration (77% would like the lab to provide additional interpretation to support diagnosis)

3) Provide patient-centric data (81% of consumers do research to diagnose their health problems, 49% of patients are not satisfied with level of data in their lab report)

Source: Data on file at Abbott.

Data on file at Abbott

PRICE PRESSURES

TIME

PERF

ORM

ANCE

DEMONSTRATIONVALUE

CHANGINGPERFORMANCE

METRICS

AGINGPOPULATION

CONSUMERDEMAND

CHRONICDISEASE

PERFORMANCEEXPECTATION

GAP

HealthcareLeaders

LaboratoryMedicine Leaders

“I can be a decisionsupport engine.”

“I want to enhanceevidence-based

decision making.”THE RELEVANCE

OF THE LAB

BETTER DECISIONS BETTER UTILIZATION BETTER OUTCOMES


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VALUE-CREATING INNOVATION FOR 70% OF CLINICAL DECISIONS4

Value-Creating Innovation transcends the traditional view of innovation. Innovation is most often viewed through the lens of Technology. Value-Creating Innovation broadens the innovation concept beyond Technology to include Enterprise Strategy, People, and Process, underpinned by the right Metrics as equally contributing components. It is the road healthcare providers and payors must take—not only to respond to the challenges facing them today, but to succeed well into the future.

Healthcare is an Ecosystem. It is a set of connected and interdependent elements that must operate synergistically to deliver efficient, effective, and affordable care. Unfortunately, this Ecosystem all too often operates out of balance. Constituents (i.e. providers, support systems, payors, patients, and policy makers) can have misaligned goals, expectations, and/or operations, which all lead to inefficiencies, decreased quality, and trapped costs.

In a Healthcare Ecosystem, the Laboratory is in the unique position to lead Value-Creating Innovation. This is where the Relevance of the Lab applies.

OPTIMIZING PERFORMANCE OF THE TOTAL HEALTH ECOSYSTEMWhen Labs lead performance optimization efforts, value is created for the total Healthcare Ecosystem. Value and Performance are frequently used terms in healthcare, but often without clear definition of meaning or intent. Value Creation and Performance Optimization in healthcare are defined as increasing access, outcomes, and/or the satisfaction of patients, providers, and payors, while optimizing cost or investment. It is essentially improving the Medical and Emotional ROI for healthcare.

Performance optimization is not a one-time project. Performance optimization is a continuous process of improvement and a cultural mindset that results in measurably better healthcare performance.

4 Crawford, et. al. Improving American Healthcare Through “Clinical Lab 2.0”: A Project Santa Fe Report. Academic Pathology. 2017; 4: 1-8.

Each system or provider could significantly improve outcomes and lower costs in the system by better using EXISTING data. The Lab is a huge untapped resource with deep and broad data on patients and physicians. If better mobilized, the Lab could improve outcomes and lower costs by improving clinical, economic, operational, and strategic decisions.


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When a healthcare system’s performance is optimized, the value to the Ecosystem is derived through increased patient access to care, better outcomes and quality of care, and/or improved satisfaction of all decision-makers, all while the costs to provide the care remain the same or are reduced. It’s the Lab’s responsibility to help create this value.

Supplying patient results in the same historical manner will not create “new” value or enable the Lab to meet increasing demands. Said another way, the Lab needs to transform its role and capabilities through continuous improvement to unlock value inside and outside the Lab.

So what is inhibiting the Lab’s ability to fully capitalize on its unique position and lead value-creation strategies that generate better outcomes for patients and payors, sustainability for providers, and higher stature for the Lab? The answer at least partially resides in how Labs and their Suppliers have approached the changing market.

THE OPPORTUNITY IS NEW THINKINGThe traditional Lab-Supplier relationship model has served both sides very well, but it is now time for it to evolve.

Labs were able to achieve their KPIs and internal service level demands by leveraging new technology (assays, instrumentation, automation, IT, etc.) and the service and support functions of Suppliers, and were able to manage their budgets through controlling prices paid for Suppliers’ products.

Suppliers who delivered new technologies, appropriate service, and built the right relationships were economically rewarded through higher sales, faster product adoption, and support in their on-going product development cycles.

However, the demands now facing Labs cannot be met with technology alone. In fact, technology alone has long-since proven to be insufficient, if not sometimes detrimental, to achieve the financial, operational, and clinical challenges currently faced by healthcare providers.

Success in the modern healthcare arena relies on completely new thinking; thinking that is “Outside-In” beginning with the Lab’s Customers’ Needs and working systematically back to answer a simple question, “How can the Lab create incremental value—clinically, operationally and financially?”


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If Labs and the Suppliers who support them, hope to remain sustainably ahead of the Performance Curve, they need to turn to an “Outside-In” framework such as Value-Creating Innovation to approach this new and ever changing environment.

Value-creating opportunities in healthcare today require a more holistic and disciplined business process approach. Therefore, Labs and Suppliers must change how they interact in order to take advantage of these opportunities. Said another way, there are new skills and knowledge required to optimize operations and lead change in the Healthcare Ecosystem (e.g. Business Process Reengineering, Business Intelligence, strategic planning, population management, health economics, just to name a few).

In summary, Lab Providers and Suppliers are left needing a new Lab-Supplier model. One that focuses on creating and sharing new value beyond technology while enabling Labs and Suppliers both to invest the best of their resources collaboratively and more effectively. A model known as Value-Creating Collaboration.

Value-Creating Collaboration is about evolving the focus and purpose of the relationship.

FROMINSIDE OUT THINKING

TOOUTSIDE IN THINKING

How Do I Create Value In My Ecosystem?

Integration

Proactive

Focus On Total Solutions That A�ect Process, People, Metrics And Strategy

Entire Enterprise And Patient Ecosystems

Quality Of Downstream Patient And Economic Outcomes

Total Cost Reduction And Medical Return On Investment

How Do I Hit My Targets?

Isolation/Silos

Reactive

Focus On Products

Lab Operations

Quality Of Inputs

Focus On Budget And Pricing

Outside In Thinking


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COLLABORATION VS. PARTNERSHIPIn the world of healthcare, there is probably no word more over-used than Partnership. Although everyone immediately understands the spirit of this word, its meaning in practice for each individual and institution can vary greatly.

Partnership is used in healthcare as constituents intrinsically know that combining forces has the great potential for creating better outcomes. However, if partners don’t adapt in such a way that creates new behaviors, actions, or thinking, new value is often left undelivered.

Collaboration, on the other hand, directs all parties involved to focus on building new value together, on changing, and on delivering an outcome greater than the sum of its parts through adaption that enables the many to operate as one.

Said another way, partnership is choosing to ride a two-seat bicycle together—each peddling and driving in the same direction. Collaboration is choosing to build a multi-seated rocket bike, flying to places never before seen at speeds never before reached (see illustration below):

The fundamental principle of Value-Creating Collaboration is that BOTH Labs and Suppliers must change in a synergistic and integrated fashion. It is only a bi-directional/bi-dimensional change in thought, behaviors, and business processes that will enable value creation and cost reduction in healthcare.

In addition to providing innovative technology, Suppliers must change by:• Putting equal emphasis and investment on people, process, strategy, and metrics,

particularly business process and intelligence• Shifting to an investment mindset considering “non-traditional” alternatives

for value creation and cost optimization • Adopting a continuous improvement mind-set and implementing a continuous

improvement model aimed at delivering Value-Creating Innovation (VCI)• Increasing transparency regarding problems, pain points, and opportunities• Providing access to performance data and being open to performance discussions• Operating and working proactively with stakeholders outside the Lab

PROVIDERS

PATIENTSSUPPLIER

POLICY MAKERS

PAYORS

LABSUPPLIER

LAB

COLLABORATIONEXPRESS

COLLABORATIONPARTNERSHIP


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Labs must change by:• Delivering an effective base service while proactively addressing

service level break-downs before they impact customer operations• Providing business process tools and dedicated, single contact

expertise that will proactively ensure optimal value is extracted from those tools

• Providing the right mix of professional services including those aimed at operational improvement, strategy development, Healthcare Ecosystem solutions, and professional growth

• Providing access to expertise for capitalizing on opportunities outside the Lab

THE VALUE-CREATING COLLABORATION MODELThe Value-Creating Collaboration Model has been developed to enable the construction of Value-Creating relationships between Labs and Suppliers. It is broken into five synergistic delivery channels referred to as Channels of Value Creation:

5 CHANNELS OF VALUE CREATION

PRODUCT

TRANSACTIONAL

OPERATIONAL EXCELLENCE

ECOSYSTEM IMPACT

STRATEGIC EXCELLENCE

Easy to do businesswith no unplanneddowntime orcomplicationof operations

Products arepresented assolutions to customer needs

Impacting operationalefficiency & effectivenessof the Lab in aquantifiable way

Impacts externaldepartments byimproving: Lab service,capabilities andorganization

Strategically& holisticallyimpacts entirehealth organization& ecosystem

2

3

4

5

1


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Although there is clear synergy among the channels, the value created by each is quite different. Each of Five Channels of the Value-Creating Collaboration Model are independent value currents, meaning behaviors, capabilities or performance in one channel are not necessarily required or sufficient for value to be created in another. Let’s examine them more closely.

CHANNEL 1: TRANSACTIONALThe Transactional Channel is defined as the day-to-day business and operating interactions between the Lab and Supplier. In this channel value is realized as the products and business processes between Labs and Suppliers are exchanged as desired. In simple terms, from the Lab perspective, the Supplier is easy to do business with, their products are performing, and the Supplier is providing support in a responsible manner. From the Supplier perspective, the Customer is easy to do business with and manages business interactions in a self-aware and accountable manner.

This is the extent of most Lab/Supplier relationships in healthcare today.

STRATEGICEXCELLENCE

HEALTHCAREECOSYSTEM

IMPACT

OPERATIONALEXCELLENCE

PRODUCTTRANSACTIONAL

QU

ANTI

TY O

F

VALU

E CR

EATE

D

“ Our instruments are really reliable.”

“ Product X is really good because…”


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Very limited value is generated here. However, significant value can be destroyed if Labs or Suppliers are forced to invest time in non-value added activities due to breakdowns in this Channel:• Lab Impact Examples: Receiving inaccurate invoices, unplanned

downtime, back-orders, etc.• Supplier Impact Examples: Returns from customers due to

customer-generated mistakes, supply shortages due to late ordering, etc.

This is not to say this channel is not important; it is essential. However, it is important to understand that most Lab/Supplier relationships focus their energy here, with very little new value created.

CHANNEL 2: PRODUCTThe Product Channel is more about how products and solutions are discussed, presented, and measured than the products or service themselves.

In this channel value is created by ensuring the focus remains on the outcomes needed by the Lab and that a holistic view of the Lab is taken into account with total cost and value understood. This is in opposition to many traditional discussions where Suppliers focus more on the products’ features and benefits, and Labs focus more on price versus value or are disabled from considering value created in their entire Healthcare Ecosystem in the decision process (e.g. reverse auctions).

CHANNEL 3: OPERATIONAL EXCELLENCEIn Operational Excellence there is a quantum movement in value creation. Through this channel, Suppliers take a giant transformational leap forward by assuming co-ownership of the Lab’s highest order Key Performance Indicators (KPIs)—even those not associated directly with the Supplier’s products. In this Channel, Suppliers begin to integrate into the Lab’s operations—proactively scanning visual and data cues for problems, pain points, and opportunities. The Supplier begins to play a different role and shifts its focus to supporting Labs in identifying and acting on continuous improvement opportunities in the operational context.

Value is created in this component through continuous assessment, modeling, designing, and implementation of value-creating actions, or continuous operational improvement for short.

“ I have noticed bottlenecks in sample reception that seem to be caused by…”

“ We can help you solve this issue by providing X solution with Y impact.”

Labs need to transform into Decision Support Engines. It’s the only way they can become and remain relevant.


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Here a Supplier truly operates as a Trusted Advisor. The Supplier continues to provide products and solutions, but additionally provides information on Best Practice and tools, assessments and services that can lead to performance enhancements.

CHANNEL 4: HEALTHCARE ECOSYSTEM IMPACTThis describes when the Lab/Supplier Collaboration is affecting outcomes outside of the Lab environment. In this channel, the Supplier is serving as a Trusted Advisor not only in the Lab, but outside the Lab as well.

Enormous value is created in this Channel as collaboration is now driving targeted improvement in the performance of the Lab’s customers. By generating this downstream value, the Lab begins to take the leadership role and builds a better position for sustainability as it can share in or benefit from the downstream financial impact it is helping to create.

CHANNEL 5: STRATEGIC EXCELLENCEStrategic Excellence occurs when collaboration has a wide influence on the entire Lab and begins to shape and support the strategy of the broader Enterprise.

Value created through this Channel can be significant as it aims to solidify the Lab as a strategic player in the Enterprise and to build a stronger more effective Enterprise strategy.

Learn more about the 5 Channels of Value Creation metrics and key behaviors for Labs and Suppliers in the Appendix.

BUILDING A VALUE-CREATING COLLABORATIONThe first step a Lab must take in building this type of collaboration is to conduct an internal assessment of its current behaviors and culture. As previously stated, the foundation of this model is that both the Lab and the Supplier need to think and act in unique and different ways to optimize value in each channel.

A simple way to conduct this assessment is by self-scoring the Lab Behaviors outlined in the Appendix on page 21. The scoring can be Yes/No or scaled on the degree it describes the Lab. The purpose of this scoring is to help Laboratory leaders better understand their existing behaviors and identify which behaviors may need to change in order to enable a new Channel of Value-Creation. This is simply about choosing which channels the Lab wants to create more value in and what the Lab is willing to invest/change to create it.

“ I was reading in the Board Minutes that Hospital X is looking to improve patient outreach. What are some of the strategies for doing this? What role will the Lab play?”

“ We have been conducting an analysis on payor strategies throughout the country. Here are some Best Practices we have found.”


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Once the Lab is comfortable with the change required and has identified the channels it would most like to optimize, it’s the perfect time to review the Lab’s potential collaborators’ capabilities and willingness to embark on this Value-Creation journey with the Lab. Although the Lab may have many Suppliers, it’s best to have one Trusted Advisor. So the Lab should feel free to cast its collaboration net wide, but choose its advisors wisely.

See “Assessing Supplier Value Creation Power” on page 22 in the appendix of this paper.

Once the advisors have been selected, take time to build a detailed value-creation road map agreeing on expectations, assessment modalities, and key processes that will be used for collaborating and integrating efforts to create value.

Some additional items in this road map may include:• Improving Suppliers’ skills regarding consulting and workflow • Working together to build strategic plans that will benefit the Lab

and the organization as well as the Supplier• Reviewing the scorecard regularly to evaluate progress• Sharing success stories from other interactions with other Labs

The road ahead will have an increasing number of challenges to overcome for Labs and Suppliers alike. The status quo of “partnership” and transactional relationships will enable just that, the status quo.

However, there is an enormous opportunity by recognizing the Relevance of the Lab and collaborating with Suppliers, to become a key driver in the healthcare discussion and the Enterprise strategy while leading the way in creating and capturing new value in a continuous and systematic manner.

The behavior changes outlined in the Five Channels serve as an excellent road map for the evolution of both Labs and Suppliers and the relationship that binds them.

When Labs and Suppliers evolve the nature of their business relationship to one that is underpinned by the principle of Value-Creating Collaboration, they can unlock value, create value, and realize sustainability.

Summary

Appendix


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CHANNEL DEFINITION KEY SUPPLIER BEHAVIORS KEY LAB BEHAVIORS KEY MEASURES SOUNDS LIKE

ONE Transactional

Easy to do business with, no unplanned downtime or complication of operations

• Complies with contract terms & conditions

• Provides flexible service offerings• Proactively addresses service &

operational issues• Does not overpromise• Advocates for customer needs

within supplier organization

• Invest in Inventory Management Programs

• Agree to consistent ordering pattern & procedures (e.g. standing orders, standard order dates, etc.)

• Actively participate in New Promoter Score feedback programs

• Unplanned downtime• Response time

- Technical service - Order support

• Customer Order Fill Rate

• On-time Order Delivery

• Invoice Accuracy - Product - Price - Volume

“We will provide your order on time.”

“We will fix your instrument issue.”

“Product X is really good because….”

“Our instruments are really reliable.”

TWO Product

Products are presented as solutions to customer needs

• Demonstrates clear understanding of customer needs

• Maintains a deep understanding of supplier products & offerings

• Implements solutions quickly & efficiently & offers confidence in the validity of the solutions

• Discusses customer needs before sharing product features

• Invest time in clearly explaining needs, strategies, & desired outcomes

• Focus on Total Value vs. solely on price

• Responsiveness to inquiries

• Depth of knowledge of technical aspects of products

• Time to implementation of projects

• Value-realization of solutions provided

• Percent of presentations/ meetings focused on customer vs. the company/products

“We can help you solve this issues by providing X solution with Y impact.”

“Tell me about…”

“What are the key challenges you are facing & why?”

“You have need X, that will provide you outcome Y, product A has feature B that will enable you to fill need X & achieve outcome Y, proven by study Q.”

THREE Operational Excellence

Impacting operational efficiency & effectiveness of the Lab in a quantifiable way

• Takes ownership of customer KPIs by helping to define them, understanding them, & systemically examining them to identify areas for improvement

• Participates in strategic planning & monthly operational meetings to create value for the organization & strategize for process improvement

• Provides consulting to continuously improve KPIs, processes & to identify new ideas in investment strategies

• Actively seeks customer problems in order to provide solutions through consulting services

• Educates customers in management, processes, financial management

• Proactively presents Best Practice

• Invest in Business Intelligence• Open weekly or monthly

staff meetings for operational consultants to gain intimacy with performance problems, opportunities & operational pain points

• Openly share KPIs & challenges while achieving both

• Challenge the supplier to challenge you; be open to outside opinions

• Leverage benchmarking as a road to Best Practice

• Invest in professional consulting services that offer operational improvement/optimization

• Invest in operational modeling software

• Improvement in customer metrics, such as: - Predictable Turn-Around-Time - Demand Capacity Alignment - Sample Workload - Analyzer Time In Use - Productivity - Profitability

• Improvement of Lab productivity measures

• Improvement of Total Cost of Ownership

• Improved levels of Lab staff development

• Demonstrated awareness & execution of Best Practices

“We can help you improve your own metrics.”

“I have noticed bottlenecks in sample reception that seems to be caused by…”

“I was looking at the Business Intelligent data, here are three opportunities for cost savings I have identified.”

“I have reviewed the most recent benchmarking report, it appears there may be an opportunity to improve PTAT by…”

“During the weekly staff meeting, Juan mentioned a service level problem with the Intensive Care Unit. We should consider executing a Value-Creating Innovation workshop with the ICU team to improve the service level while not impacting Lab cost.”


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CHANNEL DEFINITION KEY SUPPLIER BEHAVIORS KEY LAB BEHAVIORS KEY MEASURES SOUNDS LIKE

FOUR Healthcare Ecosystem Impact

Supplier impacts departments external to the Lab through improvements in service levels, capabilities, and/ or organizational alignment. Helps Lab create value outside its organization

• Helps Labs find ways to create value for their customers by helping them provide metrics for their customers, showing their customers the potential impact of their decisions, & helping their customer make beneficial changes

• Provides market expertise for inside & outside the Lab, including competition & ideas on how to create value

• Helps Labs improve medical decision-making

• Executes solution design meetings to help Labs solve issues or seize opportunities

• Thinks beyond the Lab—bring new healthcare frameworks

• Learn the internal and external Healthcare Ecosystem

• Conduct a Business Process Alignment exercise, proactively identifying value that can be created outside the Lab

• Leverage the Business Intelligence process to proactively communicate value created for downstream customers

• Invest in professional consulting services that drive value & improve service levels outside the Lab

• Improvement of Lab’s customer’s metrics - bed rotation, antibiotic savings, costs, productivity, etc. (targeted Enterprise-wide KPIs)

• Investment in the Lab• New customers or

increased volume for the Lab (if applicable)

• Optimization of patient pathways

• Targeted improvement of: - Patient Satisfaction - Payor Satisfaction - Employee Satisfaction

“This is how you can provide more value to your customers.”

“Looking at the KPIs from the Business Intelligence System, it looks like there is an opportunity to improve the service level to the ER by…”

“I was reading the Board Minutes that Hospital X is looking to improve patient outreach. What are some of the strategies for doing this? What role with the Lab play?”

“We have recently executed some patient pathway initiatives in Country Y for oncology patients. What value would you see in sitting down with your oncology team to see if there are opportunities to apply this learning?”

FIVE Strategic Excellence

Strategically & holistically impacts the entire health organization & ecosystem

• Provides business process/ formalized mechanism to develop strategies for the entire enterprise

• Maintains business relationships with key Enterprise Decision Makers (C-Suite)

• Understands Enterprise strategy & actively provides insights to drivers & effectively challenges the strategy when needed

• Actively provides market intelligence & business frameworks that enable effective execution or adjustment of the Enterprise strategy … serves as a proactive advisor/subject matter expert

• Interacts with external organizations to provide guidance & consulting

• Influences government, provides consulting on healthcare issues

• Proactively schedule Strategic Design workshops

• Actively build an external network of key opinion leaders (KOLs)

• Actively participate in broader Ecosystem events

• Achievement of Enterprise objectives

• Overall savings of healthcare organization

• Overall Improvement of: - Quality of Care - Patient Satisfaction - Payor Satisfaction - Employee Satisfaction

• Improved Enterprise-wide KPIs (i.e. newborn facility)

“We can help your entire organization to create value.”

“In order to assist your organization, we have a Strategic Workshop we can run to help deepen or optimize your existing strategy.”

“During our recent meeting with the Ministry of Health, we were told…”

“We have been conducting an analysis on payor strategies throughout the country, here are some Best Practices we have found.”

“We’d like to invite you to attend an Ecosystem Forum aimed at Demand Management.”


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CHANNEL 1: TRANSACTIONALKEY SUPPLIER BEHAVIORS Suppliers can and should deliver value in this channel by: • Complying with contract terms and conditions • Providing flexible service offerings • Proactively and rapidly addressing service and operational issues • Not overpromising on service levels • Providing a single “Point of Contact” for key transactional needs • Advocating for customer needs within Supplier organization

LAB BEHAVIORS Labs can enable the Supplier to improve performance and value at this level by: • Investing in automated administrative processes (e.g., inventory management systems)• Utilizing standing orders or consolidated ordering days • Executing agreed support and problem solving processes • Connecting instruments to remote monitoring capabilities

METRICS Providers and Suppliers should measure how well each is performing within this channel. Most metrics at this level are the traditional, transactional metrics such as: Supplier Side• Unplanned downtime• Response time – technical service and order support• Customer Order Fill Rate• On-time Order Delivery• Invoice accuracy – product, price, volume

Lab Side• Customer controlled invoice issues (e.g., over orders)• Customer controlled stock-outs/Rush Shipments

CHANNEL 2: PRODUCTSUPPLIER BEHAVIORS Labs should expect Suppliers to better understand their business and to offer solutions rather than just products. Clearly, Suppliers need to have a deep understanding of their products and services; however, in this level, Suppliers should additionally: • Discuss customer needs before sharing product features• Demonstrate clear understanding of customer needs, strategies, and drivers• Clearly articulate customer options in terms of customer outcomes• Work together to quantify the value of products or services• Implement solutions quickly and efficiently and offer confidence in the validity of the solutions


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LAB BEHAVIORS Labs can enable the Supplier to improve performance by considering changes such as the following: • Transparently sharing existing needs and issues with the Supplier• Using broader economic decision tools beyond price (total cost of ownership, value scoring, Healthcare

Ecosystem impact, etc.) to assess products and services• Helping to measure the time of solution implementations• Measuring and sharing the improvement in Lab productivity before and after solution implementations

METRICS Metrics for this channel should focus on the providers’ understanding of their own abilities, the efficiency in providing solutions, and the ability to deliver on their promises. These might include: • Depth of knowledge of technical aspects of products• Quantified value realized vs. value promised for a product or service (before and after review)• Time to implementation of projects• Value realization of solutions provided

CHANNEL 3: OPERATIONAL EXCELLENCESUPPLIER BEHAVIORS Labs should expect these Suppliers to understand their operations at a deeper level. Suppliers should be a part of the operations assessment process and be seen as experts in providing advice for improving overall performance. Suppliers at this level should: • Take ownership of higher order Lab KPIs by helping to define, measure, and report each• Systemically and routinely assess each KPI for continuous improvement opportunities• Participate in strategic planning and monthly operational meetings to understand key issues, participate in idea

generation, and take ownership of actions that can support change or value realization• Provide insight into industry Best Practices through benchmarking, studies, or learning programs• Provide modeling modalities to enable Labs to test potential changes before making financial

or time investments• Offer a broad menu of targeted services to enable the implementation of value-creating changes in people,

process, strategy, or technology

LAB BEHAVIORS Customers can enable the Supplier to improve value delivery at this level by considering changes such as the following: • Investing in Business Intelligence to measure and improve Lab performance• Sharing existing KPIs • Inviting the Supplier to participate in operational planning/assessment sessions• Inviting the Supplier to review operational metrics on a regular basis and discuss possible solutions• Investing in appropriate professional services that enable better strategic design and execution• Taking advantage of educational opportunities as provided by the Supplier


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METRICS Metrics for this Channel should focus on performance improvement of the Lab. These might include: • Improvement in customer metrics such as predictable Turn-Around-Time, demand-capacity alignment,

sample workload, analyzer time in use, productivity, profitability• Improvement of Lab productivity through projects• Improvement of Total Cost of Ownership• Improved levels of Lab staff development• Demonstrated awareness and execution of Best Practices

CHANNEL 4: HEALTHCARE ECOSYSTEM IMPACTSUPPLIER BEHAVIORS In this Channel, Labs should expect Suppliers to understand not only their needs, but those of their customers. Additional behaviors include: • Support the development of Lab value-creation strategies for targeted Lab customers• Support the development and implementation of Business Intelligence/Business Process aimed to better

serve Lab customers • Provide market expertise at targeted inside and outside the Lab value-creation opportunities • Support Labs to become more active in the medical decision making of the broader Enterprise• Execute solution-design meetings to help Labs solve issues or seize opportunities• Think beyond the Lab – proactively bring new healthcare frameworks and ideas for enhancing the

Lab’s leadership position

LAB BEHAVIORS Customers can enable the Supplier to improve performance at this level by considering changes such as: • Working with Suppliers to explore opportunities for creating value outside the Lab • Building a Business Intelligence process that establishes value creation and resulting KPIs for

their customers• Inviting Suppliers to participate in meetings to discuss strategies for organizations outside the Lab• Sharing their customer’s metrics with the Supplier and co-developing strategies to improve them

METRICS Metrics for this Channel could include: • Improvement of Lab customer’s metrics – bed rotation, antibiotic savings, costs, productivity, etc.• Investment in the Lab• New customers or increased volume for the Lab (if applicable)• Optimization of patient pathways


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CHANNEL 5: STRATEGIC EXCELLENCESUPPLIER BEHAVIORS Labs should expect these Suppliers to proactively seek to impact the overall Supplier by working to shape strategy and support its execution in the marketplace. Some key behaviors include: • Provide mechanisms (such as Strategic Workshops) to develop Enterprise-wide strategies • Deeply understand the Enterprise–wide strategies and effectively challenge the strategy when needed• Proactively and consistently communicate with Enterprise-wide leadership• Provide research and provide insights into Best Practice on the Enterprise level• Interact with external organizations to support strategic execution of the Enterprise• Educate payors (including Ministries of Health) to support the strategic execution of the Enterprise

LAB BEHAVIORS Customers can enable the Supplier to improve performance at this level by considering changes, such as: • Sharing organization strategic plans including initiatives, tactics, and objectives• Providing access to Enterprise senior management• Brokering strategic meetings • Sharing Supplier Best Practices and research within the Enterprise

METRICS Metrics for this channel include: • Achievement of enterprise objectives• Overall savings of healthcare organization• Improved overall metrics for organization (i.e., newborn fatality)


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LAB BEHAVIOR ASSESSMENT

CHANNEL BEHAVIOR

SELF-EVALUATION (1-3) As a Lab we:1 = Rarely show this behavior2 = Sometimes show this behavior3 = Almost always show this behavior

ONE Transactional

- Invest in automated administrative processes (e.g., inventory management systems) - Utilize standing orders or consolidated ordering days - Execute agreed support and problem solving processes - Connect instruments to remote monitoring capabilities

TWO Product

- Share Supplier Best Practices and research within the Enterprise - Use broader economic decision tools beyond price (total cost of ownership, value scoring, Healthcare Ecosystem impact, etc.) to assess products and services - Help to measure the time of solution implementations - Measure and share the improvement in Lab productivity before and after solution implementations

THREE Operational Excellence

- Invest in Business Intelligence to measure and improve lab performance - Share existing KPIs - Invite the Supplier to participate in operational planning/assessment sessions - Invite the Supplier to review operational metrics on a regular basis and discuss possible solutions - Invest in appropriate professional services that enable better strategic design and execution - Take advantage of educational opportunities as provided by the Supplier

FOUR Healthcare Ecosystem Impact

- Work with Suppliers to explore opportunities for creating value outside the Lab - Build a Business Intelligence process that establishes value creation and resulting KPIs for their customers - Invite Suppliers to participate in meetings to discuss strategies for organizations outside the Lab - Share our customer’s metrics with the Supplier and co-develop strategies to improve them

FIVE Strategic Excellence

- Share organization strategic plans including initiatives, tactics and objectives - Provide access to Enterprise senior management - Broker strategic meetings - Share Supplier Best Practices and research within the Enterprise


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ASSESSING SUPPLIER VALUE-CREATION POWERAs previously stated, the Five Channels of the Value-Creating Collaboration Model are independent value currents, meaning behaviors, capabilities or performance in one channel are not necessarily required or sufficient for value to be created in another.

This is why assessing each channel independently is key. However, it is important to understand that there is a minimum level of capability expected in Channel 1 (Transactional) that should be considered.

A Lab can use the following steps to assess Suppliers.

This assessment model is based on a simple Fully Capable (Blue) or Currently Incapable (Purple) scoring system.

In each Channel, there are Minimum Requirements to be considered “capable” at the level. Missing even one Minimum Requirement automatically scores the Supplier as Currently Incapable for this value delivery channel. For completeness, Optimal Requirements are included as well.

Step 1: Understand Channels of Value Important to Your Institution Not every collaboration needs to take place in Channel 5 immediately, and some may never operate in Channel 5. Keep in mind, as a Lab, enabling value creation in any Channel also comes with some internal responsibility for change as well. Aiming for Channel 3 is a great start and enables you and your Supplier to learn through the collaboration before you tackle more aggressive goals in the Healthcare Ecosystem. That being said, don’t be dissuaded from aiming at Channel 5 from day 1.

Step 2: Assess the Transactional Component This is an important step. If a Supplier is struggling in this Area over the long-run, this will disable much of the focus from creating new value. Every Supplier endures intermittent issues in operations and supply chain for various reasons; however, if a Supplier has a multi-year history of failure or disappointment in the Transactional Channel, proceed with caution.

Given this is the First Level, there is no minimum requirement to achieve it, only to move beyond it.

A simple scoring mechanism here is to rate your Supplier on a 5 point scale:

5 = Supplier is proactive, eliminating issues before they arise4 = Supplier is easy to do business with, few if any issues3 = Supplier has some issues, but takes ownership to resolve quickly2 = Supplier has major issues and is slow to resolve them1 = Supplier has major issues with little resolution


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To move beyond Level 1, a Supplier needs to score a 3 or higher.

Step 3: Assess The Remaining Channels with Fully Capable (Blue) or Currently Incapable (Purple) scoring system using a table like below:

PRODUCTMinimum:• Supplier must achieve a 3 or higher on the Transactional Scale• Sales force/Supplier representatives focus on needs vs. products• Provides access to appropriate technical personnel to quickly implement solutions

Optimal:• Demonstrates concern for Value Realization by following up/conducting post implementation assessments

OPERATIONAL EXCELLENCEMinimum:• Supplier must achieve a 3 or higher on the Transactional Scale• Offers and understand, Business Intelligence• Provides a dedicated staff member that can interpret visual and data cuesto identify and solve Operational

Problems, Pain Points, and Opportunities• Provides a broad range of professional services aimed at enhancing the operational performance of the Lab• Provides “Best Practice” assessment mechanisms

Optimal:• Offers professional development workshops and programs

STEP 3 Assess The Remaining Channels with Fully Capable (Blue) or Currently Incapable (Purple) scoring system using a table like below:

CHANNELS

TRANSACTIONAL

PRODUCT

OPERATIONAL EXCELLENCE

ECOSYSTEM IMPACT

STRATEGY EXCELLENCE

SUPPLIER A

3 5 2

SUPPLIER B SUPPLIER C

Scorecard Showing Minimun Requirements


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HEALTHCARE ECOSYSTEM IMPACTMinimum:• Supplier must achieve a 3 or higher on the Transactional Scale• Offers frameworks, tools, processes and training for identifying and solving non-Lab problems• Demonstrates expertise in the Supplier/Health Economics

Optimal:• Offers Business Intelligence capabilities that can span into the Lab’s customer base

STRATEGIC EXCELLENCEMinimum: Supplier must achieve a 3 or higher on the Transactional Scale• Offers comprehensive education and development solutions in a number of areas including Strategy,

Tender Response, and Demand Management• Understands enterprise strategy and has the knowledge and expertise to proactively identify opportunities• Understands payor principles and can support both payor and patient driven strategies

Optimal:• Has relationships and influence with key decision makers, Ministry of Health, government and

healthcare leadership

ACHIEVE MEASURABLY BETTER HEALTHCARE PERFORMANCE

CHOOSE TR ANSFORM ATION TM

CORELABORATORY.ABBOTTChoose Transformation is a trademark of Abbott Laboratories in various jurisdictions.

© 2018 Abbott Laboratories ADD-00064050

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